Wilder's Trend Balance Point System (TBPS) and Pivot Points Revisited

Trading Systems
#41

Right so that’s the MF.

I need to now see what’s what on some more instruments.

I guess my idea (at present anyway) is that the RSI(2) rules above remain. I’m hoping that the MF will then tell you on which days to take the trade and which not. In other words: we’d be doing the total opposite of Wilder’s system. Dunno if that makes sense.

So to just take short trades let’s say last night (and I didn’t do this last night i.e. just went for it):

RSI(2) has been elevated for flipping DAYS (ask me how I know). So now I’m looking for short trades only. Now I want to see what the MF says. If the MF says to go short then play the system as I described type of thing. But if I’m looking for short trades and the MF says to go long then no trade. Does that make sense???

Let’s see,

P.S.

Actually just noticed that last night RSI(2) wasn’t above 75. Just mentioning this so as not to confuse. I just went short because I’m still short other positions.

#42

Yes it does make sense. And since the MF signal requires the third day’s close then that ties in nicely with the RSI 2 requirement of at least 2 days above 75.

However, I suspect that for the MF to give a number greater than the previous 2 days’ differences, it will probably also meet the standard RSI parameter of going short once the RSI drops back below the 75 level anyway - which means it might not be adding anything new here? But I haven’t looked at any examples on this.

1 Like
#43

Don’t worry. I’m on it!!! LOL!!!

#44

I downloaded data from my platform for oil dailies and did a very quick cursory look at MF from the buy side and it looks worthy of further investigation.

In this example the columns are:

1 - Date
2 - Close
3 - MF (close - close(-2))
4 - MF if greater than previous day’s MF (otherwise empty)
5 - MF if greater than 2 days previous (otherwise empty)
6 - High from following 2 days highlighted in yellow when 4 & 5 valid
7 - Max pips from close to high of next two days

Most days do exceed the close by a certain amount but thöse closes that form an MF do seem to have a good follow-through.

This was only a quick construction and not verified against errors but shows promise of a basis for near term trades based on MF, either alone or in combo with other techniques.

2019-06-24 MF
2019-06-24 MF585×652 7.66 KB

1 Like
#45

Very nice.

I’ve run out of steam I’m afraid. Was up too late last night. Just closed the last two positions out also at profit albeit not much (those just taken last night i.e. no MF involved as yet but only RSI).

Will look at this tomorrow again fresh.

But if your results are that good regardless of RSI then maybe also time for us to revisit the original system too as that is nothing other than pivots really if you look at the formulae for stops and TP levels??? Dunno if you still have the book but I have put it on my Google Drive and the link is posted somewhere toward the end of my main thread. It’s a good system. Just a pain to maintain on a daily basis especially if your charts close at your midnight or 23h00.

#46

Morning.

Well I have to say I’m maybe seeing a variety of spinoffs here.

The MF on its own sure does seem to be effective.

I do remember (now that I’m looking at this again) that the only reason for not following Wilder’s TBP system was the time involved as touched upon above. Calculating the initial entry MF is easy. It’s once you’re in the trade and then having to figure out whether you should still be trading in one direction or the other is where it starts getting a bit complicated and time consuming. Possibly not an issue if you’re only trading one instrument with this. But certainly an issue (for me anyway) in having to do all this at midnight every night (even an hour later when the UK changes its clocks) i.e. that’s when the daily bars tick over on my platform. With my core trading system I pretty much fudge things anytime from around 10h00 my time which is manageable (that’s when the NYSE closes). Anyway. Just remembering now why this was such a ball ache.

The above being said: for sure this thing would have resulted in profitable trades for the last few days on just about everything I’ve looked at. This without holding any positions open i.e. simply go short as indicated by the MF and TP at the next lowest pivot level. This with even ignoring RSI(2). The better trades would of course have been NOT going short at market but placing limit sell orders at the pivot.

There is a lot to work with here I think.

I don’t think I’m going to bother back testing this stuff. It’s something I very rarely do. I prefer simply jumping in and going for it. So I’ll see how simple or complicated I wish to make this.

At this point I’m leaning toward the following:

Long or short as per the MF BUT the direction as indicated by the MF must be in agreement with where price opens relative to the daily pivot. In other words: IF the MF indicates a short trade then price must open BELOW the pivot. If these conditions are true then a limit sell order is placed at the pivot. If such order is executed then TP is the next lowest pivot (which in this case would obviously be S1). This ignoring RSI(2). So this is one possibility.

Next possibility and based on RSI(2). If the MF indicates a short trade and if RSI(2) is still indicating a valid short trade as per my core trading system then limit sell orders are placed at R3 and TP is R2.

In both cases above: trades are closed just before the close regardless of PL.

Third possibility of course is trading pure Wilder TBPS.

One thing of interest and something I noted YEARS ago:

You will note of course that the MF (and therefore Wilder’s TBPS) has a long bias. No surprise there let’s face it. For this reason it’d be useless on FOREX (no surprise there either).

#47

If I understand this correctly then you are looking at MF as:

a) a trend following method when combined with the daily Pivot?

b) a contra-trend method when combined with the RS2?

If so, then with the Pivot approach (pro-trend) I would anticipate that the first S/R level might be too conservative and levels 2 or even 3 might offer greater rewards?

#48

Hello.

I’m not quite sure WHAT I’m looking at!!! LOL!!!

But in just reading your post that SOUNDS about right.

In just looking now again at Wilder’s original system:

His TPs were exactly that i.e. R1 and S1 (he just didn’t call them that is all). But you could be right. Maybe exiting half a position at R1 or S1 and the remainder either at the close or R2 and S2. Something along those lines. And his “X” is nothing more than the main pivot.

The other thing I seem to remember is getting stopped out which drove me nuts. But you know: as I’ve said things seem to be a lot clearer for me these days (maybe because I have a few beers once or twice a month nowadays as opposed to two bottles of rum over a three day period as was the case some years ago!!! LOL!!!). Point is: I note that he used the TRUE RANGE to calculate stops. I’m just wondering if using the GREATER OF the TRUE RANGE or AVERAGE TRUE RANGE (or even multipliers of either) may be just the ticket.

The other problem I see myself running into with this system are my ultra wide soft stops based on my risk based position sizing. Just looking at a short Dow trade right now. I can only take two lots short. But if I elected to rather place my stop at R3 for today: that could be 12 lots. Makes the difference between making something like 188 or over 2K if the TP at S1 is hit. That type of thing.

Most definitely going to spend time on this (as I say: things much clearer to me nowadays for some reason). Maybe the only way to go for me here is to only trade this thing on ONLY ONE instrument daily like the S&P. That’d be easy to manage really i.e. just input one closing price after the close.

See it comes back to my original problem and the reason for starting this thread. My core trading system is great but sometimes it doesn’t pay off often or soon enough. I’ve been in my current positions now for weeks and month end is coming. Overall on average per annum no problemo. And once this revamped property deal is closed (it’s been resurrected thank fuck) then also no problem. But right now: problem i.e. I simply cannot continue to draw on capital to pay bills for the next two or three months.

Anyway. There’s “gold” in this somewhere.

#49

I think I’ll just keep posting random discoveries here (if I don’t do this I’ll never write the stuff down). Maybe after a while we can collate the whole lot into some type of definitive system (or two or three).

In just looking at the Dow right now:

The MF would have had me go short at market last night. BUT: price opened slightly ABOVE the daily pivot. So based on my previous thoughts: that would have kept me out of the short trade which has already traded to just north of S1.

P.S.

Because on this trade the TP has not as yet been hit (S1) I’ve placed a limit sell order at the daily pivot. Maybe get a second shot at the trade.

Worth noting that since the open though: price did indeed trade up to and slightly through R1 before barreling down through the daily pivot.

#50

That is really good news! Let’s hope it gets there! :+1::+1::+1:

2 Likes
#51

Dunno what FIVE “Likes” is called!!! LOL!!!

Yeh. Have reverted back to the original Buyers that I had who SURPRISINGLY are still very keen (this after being mucked about by certain other people). They’re in a hurry to close the deal so another meeting tomorrow. But still at least two months away from $$$ (and based on historical performance probably three) (and that assumes that all paperwork is complete and submitted before the end of this month).

#52

But you know and can I tell you something:

I’ve been looking at how Wilder’s Swing Index System would have been performing since being back here again (cannot help it as that system is so ingrained in my head that I can see the trades without even having the darn ASI on a chart). And I simply cannot fathom how come I just could not trade it years ago and that after spending years finessing indicators for it. And I’m seriously starting to think it was due to information overload and lack of concentration or something at the time. That is a trading system of note IF you have what it takes to follow it.

UNBELIEVABLE actually and SUCH a waste looking back on it all now.

#53

In just taking a quick squiz:

Wilder’s stops for the TBPS are pretty wide actually. But they could be wider in my opinion. So to this end instead of using the True Range I used the 14-day ATR. Right now that would have put the stop above R3 for today. That’s a pretty wide stop.

#54

Well I got my Dow short anyway. Let’s see what happens. Position size based on my risk based position sizing though so only 2. PIA.

#55

Oh well. TP hit no problemo. Didn’t even realize as I went to the shops. Rinse and repeat tomorrow I guess.

#56

This is a rabbit of of untold proportions millions of threads to pull and you try to keep them all straight and this when - I believe - curve fitting makes an appearance and the forex grail is in sight. Look at all the indicators that have been developed over the years professionals doing the same thing, a different perspective.

I am not nearly as savvy as you guys. I see price go up and down and envision an elevator in my head. Am I going up or down and which floor do I get on and off at.

Will say, though, I’m learning a lot!! from my friend William Connors!! :laughing:

KC

1 Like
#57

Oh well.

Let’s try that again shall we (on the Dow). You know: rinse and repeat.

MF lower than both previous days so short trade.

Have placed a limit sell just south of the daily pivot and TP just north of S1 (this as opposed to simply going short at market when the futures open again shortly).

For what it’s worth: RSI(2) would still have (has) my core system in a short trade i.e. closed below 30 but another close below 30 required before it is signalling a long trade. So as a filter it’s possibly still intact although at this point I’m prepared to forego this idea for now. Reason being is that If I look at the last uptrend (before the debacle of today) it would, as a filter, have kept me out of the long MF trades that most certainly hit their TPs every single day on the way up. Then again: maybe that’s the supercharged version of this too i.e. I made profit last week by taking short trades in spite of this. Might be pushing the envelope here but man: imagine going long as per the MF, TP at R1, then short again at R3 and TP at R2. Possible??? Too good to be true??? Hmmmnnn…

Anyways. That is now ME for the day. Good day it’s been.

#58

Ah what the hell. Short the DAX at the daily pivot. TP: S1.

Regards,

Bill Wilder.

1 Like
#59

Or is that Wild Bill? :wink:

1 Like
#60

At this stage of this thead: Wild Bill is about right!!! LOL!!!

But for sure there’s something to this.

Honest truth: I think I’ve matured (in more ways than one). I am surprised myself at the ease at which I’m prepared to venture out and try something like this again. And I think it has EVERYTHING to do with my risk based position sizing. Smaller lots carefully calculated. Small profits on these trades. Take the losses on the chin. Rinse and repeat the next day. And it’s a good feeling.

And actually I say the profits are small. They’re actually not. To me they’re small because my base currency is ZAR. But because it’s a spread betting account: it’s like-for-like. So I may be berating myself for small profits that are not worth much in ZAR. But if the account was converted to a USD base currency these small profits would be USD profits on a like-for-like basis. And I’m talking about +200 (ZAR or USD) per trade here with this stuff. Those add up real quick and have done so since last Monday. Take those profits in USD and convert them back to ZAR??? I can tell you that these few trades thus far would be my rent at least.